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L&T fears Navi Mumbai airport project may cost Rs 5000 cr more

India's biggest infrastructure and engineering conglomerate L&T has raised fears that Navi Mumbai airport's project cost will shoot up by Rs 5,000 crore due to the Union Cabinet's nod to the Land Acquisition Bill, which threatens to increase the project cost.

Besides L&T, other infrastructure companies, which are on the hunt for new projects, are also likely to get into a spot of bother over the new compensation package proposed by the Bill.

"How are you going to ever put up a project, because the airport project cost will go up by Rs 5,000 crore," said AM Naik, CMD, L&T, voicing fears that farmers would now expect the compensation package to go up by 5-6 times once the Bill is cleared by Parliament.

The Navi Mumbai airport project, at an estimated cost of Rs 9,800 crore, is the biggest infrastructure project on offer in Mumbai, and corporates like Reliance, the Tatas, GVK and GMR, (both south-based companies that operate four metro airports, including Delhi and Mumbai) and HCC, among others, are keen to be associated with the project.

The cost of the airport project has already increased by 15% since it was announced in 2009. "The Land Acquisition will prove to be a major hurdle in Navi Mumbai since farmers are now asking for prohibitive prices," said a person involved with the project.

The airport, located on 2,042 hectares, is to be constructed on a Public-Private Partnership (PPP) basis with the AAI and CIDCO controlling 13% each. The project has already been delayed as the environment ministry's clearances came in early this year after a delay of about a year.

"Navi Mumbai airport was moving reasonably well till the Land Acquisition Bill was introduced in Parliament. Now that has raised the expectation of farmers by 5-6 times. And if you go on that basis, no project will come up if the land cost itself is going up by Rs 5,000 crore," Naik told ET NOW.

The new land acquisition policy proposes compensation 4-5 times more, depending on the last registration deal of that area over the past three years. The proposed policy means that companies wishing to start a project will have to work out relief and rehabilitation packages for the displaced people. In Navi Mumbai's case, this is about 224 hectares.

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